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Avoiding divorce mistakes that could cost thousands

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Avoiding divorce mistakes that could cost thousands

| Jan 6, 2017 | High Asset Divorce |

In some Pennsylvania divorce cases, people agree to certain property division scenarios that cause them to miss out on thousands of dollars that they might have otherwise been entitled to receive. Some agree to these settlements because of not understanding how property and assets should be divided while others do so to just end their divorces as quickly as possible.

Pennsylvania is an equitable distribution state. This means that marital assets will be divided by a court in a manner that it deems fair rather than simply halving them between the spouses. One mistake some lower-earning spouses in the state sometimes make while attempting to negotiate a resolution is thinking that an equal division of property is fair. It may make more sense to allocate a greater percentage of the assets to the lower-earning spouse since the higher-earning spouse is likelier to be able to recover financially much faster after the divorce.

Giving a lower-earning spouse a higher percentage of retirement accounts may be especially important so that he or she may have the ability to retire later on. The potential tax consequences of various property division types should also not be overlooked. Some assets may come with tax liabilities that could cost thousands of dollars after the divorce. Finally, it is important for people to determine whether or not they need qualified domestic relations orders to divide different types of retirement accounts. These orders tell the plan administrator what percentage to pay the recipient. They are also used to avoid early withdrawal penalties that might otherwise be assessed.

High-asset divorces can present other difficult issues as well. When a couple has been together for a long time, there may be some marital property that has been forgotten about, such as long-dormant bank accounts. In other cases, one of the parties may have intentionally tried to conceal assets. A person who is facing this type of uncertainty may want to have the assistance of a family law attorney as well as a financial professional to ferret out these assets.

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